10-KPeriod: FY2012

SEMPRA Annual Report, Year Ended Dec 31, 2012

Filed February 26, 2013For Securities:SRESREA

Summary

Sempra Energy's 2012 Form 10-K reveals a diversified energy infrastructure company primarily operating regulated utilities in California (San Diego Gas & Electric and Southern California Gas Company) alongside growing international and U.S. non-utility businesses. The company's financial health and operational performance are significantly influenced by regulatory environments, commodity prices, and capital market conditions. While the California Utilities provide a stable, regulated revenue stream, the company is also expanding into areas like renewables and LNG, presenting both growth opportunities and increased market risk exposure. Key operational highlights include the ongoing management of regulatory proceedings, investments in infrastructure, and the continued impact of events like the San Onofre Nuclear Generating Station (SONGS) outage and wildfire litigation costs on financial results. Investors should note the significant regulatory oversight by the CPUC and FERC, which impacts rates and operations. The company faces substantial risks related to environmental regulations, potential litigation, commodity price volatility, and cybersecurity. Despite these risks, Sempra Energy's diversified portfolio, including its international operations in Mexico and South America, positions it as a significant player in the energy sector, with ongoing efforts to balance regulated utility stability with the growth potential of its non-regulated segments.

Financial Highlights

48 data points
Beta

Revenue

$9.65B

Net Income

$859.00M

8.9% Net Margin

EPS (Diluted)

$1.74

Total Assets

$36.50B

Cash & Equivalents

$475.00M

Free Cash Flow

$2.02B

Financial Statements
Beta
Revenue$9.65B
Interest Expense$493.00M
Net Income$859.00M
EPS (Basic)$1.78
EPS (Diluted)$1.74
Shares Outstanding (Basic)482.69M
Shares Outstanding (Diluted)493.39M

Key Highlights

  • 1Sempra Energy operates a diversified portfolio including regulated utilities (SDG&E, SoCalGas), international operations (Mexico, South America), and U.S. energy infrastructure (renewables, gas & power).
  • 2The company's California utilities are heavily regulated by the CPUC and FERC, impacting rates, capital expenditures, and operations.
  • 3Significant risks include regulatory changes, commodity price volatility, environmental regulations, litigation (e.g., 2007 wildfires), and cybersecurity threats.
  • 4The extended outage at the San Onofre Nuclear Generating Station (SONGS) continued to be a significant factor, with ongoing regulatory investigations and potential cost implications.
  • 5Sempra is actively involved in expanding its U.S. Gas & Power segment, including plans for LNG liquefaction and export capabilities at its Cameron LNG terminal.
  • 6Environmental matters, particularly concerning air and water quality, and greenhouse gas emissions, are subject to stringent regulations and represent ongoing compliance costs.
  • 7The company manages labor relations through collective bargaining agreements with various unions across its subsidiaries.

Frequently Asked Questions

Sempra Energy's primary revenue drivers come from its regulated utility operations in California, namely San Diego Gas & Electric (SDG&E) and Southern California Gas Company (SoCalGas), which provide electricity and natural gas services. Additionally, its international and U.S. energy infrastructure businesses, including renewable energy generation, natural gas pipelines, and LNG terminals, contribute significantly to revenue.

Key risks include changes in government regulations and their interpretation, capital market conditions and access to credit, fluctuations in commodity prices (natural gas, electricity), environmental compliance costs and new regulations, potential litigation outcomes (such as those related to the 2007 wildfires), cybersecurity threats, and operational risks associated with its diverse energy infrastructure.

As of the filing date, both Units 2 and 3 at SONGS were offline due to steam generator wear. This extended outage led to regulatory investigations, including an Order Instituting Investigation (OII) by the CPUC to determine cost recovery and potential refunds to customers. The situation created uncertainty regarding future expenditures and recovery of costs associated with the facility.

Sempra Energy's international operations, primarily through Sempra International (Sempra Mexico and Sempra South American Utilities), are subject to local laws and regulations in Mexico, Chile, and Peru. The company manages market risks in these segments by hedging commodity prices, entering into long-term contracts where possible, and seeking to secure necessary permits and approvals. However, these operations are exposed to foreign currency fluctuations, political risks, and varying regulatory environments.